Some Canadians welcomed the move after the federal government announced Thursday it would introduce holiday tax breaks on some products, while others were more understanding. said.
“I think it will be helpful for some people. That’s really great,” said Leemore Valin, who was shopping in Toronto.
“I really feel that what makes this country great is all the services we provide to different kinds of people,” she said. “So I’m happy to be able to pay my own taxes. I think that’s really important, but I’m glad to hear that.” [that] Maybe it will help people in more difficult times. ”
- Are federal food tax cuts enough? How do you save money on food at home? that’s the first topic Cross country test this Sunday. Please leave a reply here You might read it on the show on November 24th.
In addition to the GST holiday, the federal government will cut the $250 checks for working Canadians earning less than $150,000 starting around spring 2023. But Jack Knight, who was shopping at the Vince Market grocery store in Sharon, Ont., where Prime Minister Justin Trudeau made the announcement, said the policy was “just a bribe.”
“All these parties are doing this. As the election approaches, they start handing out gold bars,” said Knight, who lives in Barrie, Ont. “I don’t think that would be acceptable to the general public.”
On Thursday, the federal government announced that from December 14, 2025 to February 15, 2025, GST on some eligible goods and services such as processed foods, restaurant meals, children’s toys, books, Christmas trees, etc. announced that it would lower the
Lisa Amato, who was shopping at Vince’s Market, said it was too little, too late and the government should consider cutting taxes permanently “or at least until the economy recovers.” But senior Marilyn Reed, who said she’s tired, said it will definitely help her shop.
As Canadians start taking advantage of two months of tax breaks, some small businesses argue they can get a much-needed vacation boost. during the weak years For consumer spending. Meanwhile, a handful of economists are concerned about what the consumption boom will do to the economy.
Prime Minister Justin Trudeau announced Thursday that GST will be suspended on some goods for two months as part of a series of new measures to help Canadians cope with cost-of-living pressures. We asked Canadians what they thought about the temporary tax cuts.
Voices of small and medium-sized enterprises
Standing next to a wall of colorful stuffed animals, Toronto businessman Sam Care said he was happy to see Ottawa move and said he expected a chaotic shopping rush at the Playful Minds toy store.
“People want a deal,” Keir said. “As you know, the economy has gotten even tougher for a lot of families, and I think families are going to take great advantage of this situation.”
She has some questions about the impact on her business. Will her store be empty until December 14th? Will she need to adjust her staffing schedule? How much inventory will she need?
“If it’s only for two months, will people stock up or will they buy now to buy later? We don’t know. Everything is up in the air right now,” Keir said.
Dan Kelly, president of the Canadian Federation of Independent Business, said in a statement that his organization welcomes any tax breaks. But he said a “narrow, temporary sales tax holiday could add confusion and administrative complexity for small business owners.”
“Temporary sales tax cuts will help boost demand in some sectors, such as restaurants, during the post-holiday downturn, but Canadians and Canadian businesses really need a permanent tax cut,” Kelly said in a statement. ” he said.
Ms Keir said she welcomed the attention from the government, but added she and her staff were ready. “We have some products in our store, so it will take a little while. [are] It’s not tax-free, so you have to figure everything out and double-check everything,” she said.
“So it’s definitely going to take a little bit of work behind the scenes.”
Is affordability enough?
Gillian Petit, a senior research fellow at the University of Calgary’s economics department, said the policy helps people save money at the register, but it may actually be more effective for people with higher household incomes. Ta.
“They’re earning more, so they’re spending more,” she says. “Low-income earners are also going to save on GST, but they won’t save as much in dollar terms. They earn less, so they spend less.”
The $250 rebate is targeted at people hired in 2023 and excludes those who may need it most, Petit said. “If you really want to address affordability, you would target people who are struggling with affordability. [or] These are people who spend a large amount of their income on daily necessities. ”
At one food bank in Toronto, most customers are looking for basic groceries. Food products such as fresh fruits and vegetables, meat, eggs and bread are already tax-free nationwide.
Kitty Laman Costa, executive director of the Parkdale Community Food Bank, said the GST holiday “will give Canadians a bit of a break, but it won’t be enough to meaningfully impact affordability.” ” he said.
More workers are using food banks than in past years, she said.
“These are long-term challenges and require long-term support. We are pleased to see more dedicated approaches to supporting Canadians facing income insecurity and economic insecurity. It’s definitely great.”
The number of visitors to Toronto’s food banks rose by one million this year compared to last year, bringing the total number of visitors to 3.49 million between April 2023 and April 2024, according to a new report. Neil Hetherington, chief executive of Daily Bread Foodbank, says this is part of a wider cost of living crisis.
This measure could cause inflation in the spring
Following the announcement, some economists said that GST demonetisation could have an inflationary impact on the economy in the future.
Bank of Montreal managing director Benjamin Reitzes said in a note Thursday that headline inflation will slow in December and January (as the GST break begins mid-month) before reaccelerating in February and March. He said it was highly likely.
He said the latest round of stimulus, combined with other factors such as a cautious U.S. Federal Reserve and a possible upward revision in GDP, means that the Bank of Canada will raise its key interest rate by 25 basis points instead of 50 at its next meeting. He said it was likely to mean lowering the amount. .
Rob Gilleso, an assistant professor of economic analysis and policy at the University of Toronto, said the government’s move was a “nightmare” for economists, saying the temporary tax cuts would distort people’s spending behavior.
He said the research is done outside the United States and sometimes in some states. embed Tax breaks have proven to be ineffective as affordability measures.
“What’s the worst thing we could do with $6 billion? Maybe it’s not the absolute worst, but it’s the really, really worst. It’s unfortunate,” Gilzo said.
Treasury officials told CBC News after the announcement that the tax cuts would generate an estimated $1.6 billion in windfall revenue for the federal Treasury, and the $250 checks would cost about $4.68 billion. spoke.
Gilzeau echoed Petit’s comments, saying the lowest income earners and those with no income were excluded from the policy. “I don’t know how you justify that from an affordability standpoint,” he said.
He warned that the combination of the two measures could have an impact on inflation: “Sending checks to a lot of people and then squeezing all the spending in this short period of time.”
